Move to stabilise volatile milk market is pondered

Better regulation of retailers an option, says minister

By Joe Watson

Published:

Regulation could be on the way to protect farmers from retailers buying farm produce at below the cost of production.

Rural Affairs Cabinet Secretary Richard Lochhead last night gave his clearest hint yet that legislation may be introduced to govern relationships between farmers and retailers to ensure a fairer distribution of profits through the supply chain.

He left a “summit" in Edinburgh to discuss the financial crisis facing dairy farmers, saying Scottish food production had to be treasured and its future secured.

Mr Lochhead’s commitment to food production came as Tory leader David Cameron backed an improved code of conduct and ombudsman to make trade between farmers and supermarkets fairer.

The Holyrood gathering, involving retail giant Morrison's, MSPs and 17 farmer groups, dairy processors and trade bodies, saw a full and frank exchange of views as well as several ideas emerge on helping the dairy sector, all of which would now be progressed, including improved labelling.

But there was controversy as Tesco, Sainsbury's, Asda, the British Retail Consortium and Scottish Retail Consortium snubbed the historic gathering, amid claims it breached competition law.

They were criticised by politicians and farming groups. Labour MSP Elaine Murray said their non-attendance was gravely disappointing as they held the key to kickstarting the recovery in the milk sector.

She added: “Unless they get the message that they are going to have to pay for it (milk) then people will not be able to get fresh Scottish milk.”

Mr Lochhead was clear in the need for action to protect dairy farming. He said: “Every part of the supply chain has to a get a fair share of every pound spent by consumers. We should learn from what happened with the banks, where there was a lot of power in a few hands. We don't want that to come back and bite us again."

Mr Lochhead acknowledged better regulation of the retailers was an option as the future of the Scottish food industry lay in the hands of a few boardrooms in London. This was not a good position for any country to be in.

Mr Lochhead said regulation through an ombudsman or “something similar" would help as could other ideas that emerged to bring stability to increasingly volatile dairy markets.

Those leaving the gathering were impressed by the discussions. Sorn Milk boss David Shaw, who leads a group of 75 dairy farmers, was more optimistic, adding: “I think we're heading for legislation." First Milk vice-chairman Robert Shearlaw said there was a commitment from all sides to work to solve problems in the dairy chain.

NFU Scotland chief executive James Withers questioned why Asda could not attend as its bosses were last night hosting a reception at the Scottish Parliament. He left the meeting far more upbeat, particularly after the commitment on labelling.

Another meeting to follow-up the summit is to be held soon, Mr Lochhead added.

Mr Cameron also yesterday committed the Tories to a cull of badgers to stop the spread of bovine TB in England and Wales.